Opinion by Lucy Hinton, SVP Client Success EMEA, Flashtalking by Mediaocean
Throughout the past two years, the UK economy and job market have experienced a rollercoaster of extreme highs and lows. From the dramatic fall in employment at the start of the pandemic to The Great Resignation last year, the landscape has been anything but consistent. To add to the economic uncertainty, some experts are even predicting that a recession may be on the horizon.
Despite the looming financial threat that recessions pose to both organisations and individuals, downturns are actually a relatively common occurrence. For example, since 1857, a recession has occurred on average about every three-and-a-quarter years. Post-WW2 however, the frequency has reduced to become closer to one in every five years and recessions have also reduced significantly in duration. Thinking about recessions in this way – cyclical – is a crucial mindset for business leaders in weathering the storm.
As it stands, the economic crisis we’re seeing play out this year is relatively unique. In most recessions, economic output and employment decline simultaneously. Losses in revenue often force businesses to cut down on staff and higher levels of unemployment lead to reduced consumer spending. In 2022, however, the progression seems to be playing out in reverse. Events are very much being led by the consumer as the cost-of-living crisis rapidly deepens. In fact, job vacancies were at a record high earlier this year and have only just begun to fall for the first time in two years. Therefore, it’s difficult to predict what the next few months will look like and the potential severity of the situation.
While marketers may be starting to worry about what to do with many assuming they will be asked to cutting marketing budgets, the good news is certain trends in consumer behaviour will be repeated time and time again and marketers can use this to their advantage. To remain on the front foot, it’s essential that marketers consider ‘recession psychology’. Paying attention to these trends and adjusting strategy accordingly, will provide a ‘guiding star’ to navigate this new economic landscape.
Exploring the new landscape
During a recession and the recovery period, a company’s audience may shift. For context, customers traditionally sit in one of four groups depending on their priorities, financial situation and attitude towards spending. Therefore, while the actual consumer demographic will likely be the same, the financial and situational impacts of a recession may have shaken up the categories.
Marketers also need to consider what their product or service means to its customers. Regardless of which category a customer fits into, purchasing decisions will always vary. The four main camps are Essentials (necessary for survival), Treats (indulgences), Postponables (purchases which can be put off but are still needed) and Expendables (perceived as unnecessary or unjustifiable). Where products sit within these categories is also likely to change throughout a downturn.
It’s essential that marketers understand the potentially evolved audience and where their financial priorities now lie. This is going to form the basis for a new strategy and allow for a proactive and agile approach.
Collaboration is key
The pandemic proved the crucial role that internal collaboration plays across businesses. Resourcing squeezed workloads and placed more pressure on the workforce. This meant collaboration was essential for relieving some of the pressure and aiming to reduce burnout in the workforce.
Notably, the C-Suite has also had to step up in this area. Historically, C-level executives have largely worked in a siloed, parallel approach to one another. A disconnect means that problems or inefficiencies can go under the radar and unnoticed. Typically, the C-Suite are the ones driving the most change within an organisation, and therefore, it’s essential they’re aligned on the company’s wider challenges and goals.
CMOs and CFOs in particular have faced abrupt areas of change. For marketers, adapting to the needs of consumers who had their lives turned upside down has required real, rapid innovation. On the finance front, the shifting economic sands have needed faster analysis of better data than ever to manage. Organisations need to encourage the partnership of marketing and finance to accelerate any transformation initiatives or proactive plans put in place to support in the business in tougher times.
Using data and insights to drive activity
Though the temptation is to cut costs by reducing media spend, the smarter move for marketers is to focus and streamline their spending. Reducing the media spend throughout a difficult period is the equivalent of throwing away your fishing net at the first sign of choppy waters ahead.
When it comes to the media, consumers are inconsistent and difficult to predict. Their needs and requirements are constantly shifting and so marketers must be agile in their approach. After all, no channel happens in a vacuum.
In an omnichannel world, everything is on the table and there for the taking. Data analysis is the vehicle through which marketers can understand what’s being offered on the proverbial table and select the appropriate choices for their audience.
One of the joys (and pitfalls) of the business landscape is its unpredictability. Though economic uncertainty and a potential recession aren’t a good thing, it does provide businesses and marketers with the opportunity to review their current strategy with a fresh mindset. Reframing the way that we traditionally approach downturns could be the key to futureproofing an organisation.